Wednesday, December 28, 2016

Economists Say Trump Delivered Hope

Now he needs to boost wages and create jobs to keep the economy on track.

Economists say Donald Trump is right to credit himself for sending consumer confidence to a 15-year high this month as Americans reported a rosy outlook for job creation, business growth and the stock market.

The news broke Tuesday, when the Conference Board said its Consumer Confidence Index soared to 113.7 in December, the highest level since 2001. The jump surprised economists, who say the economy has been slowing down. But it didn’t surprise Trump.

“Thanks Donald!” the president-elect said Wednesday morning on Twitter.

Trump’s election put the country in a good mood, economists say.

“There’s a lot of hope that things are going to change and get better,” said Mark Vitner, a senior economist at Wells Fargo. “Let’s see what happens.”

American’s weren’t particularly overjoyed about the economy. What made them cheerful was the hope for a new, better economy. The Conference Board’s measure of expectations, a measure of how consumers feel about the future, leapt to a 13-year high as Trump’s promise of more jobs, lower taxes and a better business climate made people upbeat.

“Optimism did surge after the election. The question is can we maintain it,” said Lynn Franco, the Conference Board’s director of economic indicators. “That depends on what happens in terms of the economy and job growth.”

It’s not unusual for consumers to feel better after an election, especially when a new party takes office. Ronald Reagan, Bill Clinton and even Barack Obama, who won his first presidential campaign in the midst of the Great Recession, enjoyed a boost in consumer optimism the month they were elected.

By contrast, optimism sank as the nation waited on hanging chads and Bush v. Gore at the end of 2000.

“Elections always give confidence a boost. There’s a sense of relief that it’s behind us,” Vitner said. “There does seem to be something to the Trump bump.”

This election year, the economy has been on a long road to recovery since the Great Recession ended in 2009. Consumer confidence has been on the upswing all year.

Still, confidence doesn’t boost wages or create jobs, and nine of the past 10 recessions began under Republican presidents.

“Trump will be breaking with tradition if we don’t see a recession in the next four years,” PIMCO’s Joachim Fels wrote in a recent blog post.